How to trade Ethereum (for Dummies)

Ever since the popularisation of Bitcoin, several new cryptocurrencies have risen. This fact is significant since the idea of cryptocurrencies themselves is to decentralise the economy. Plus, more cryptocoins mean more options, and this is crucial for accomplishing such objective. Referring to Ethereum, the popular definition could be that of a cryptocurrency born after Bitcoin and that, today, is one of the most valuable and used in its type.

However, what sets Ethereum apart is that it’s not just a currency but an entire platform for transactions and contracts. And this is what makes its actual token, the Ether (ETH), so valuable (one of the top 5 highest priced cryptocurrencies).

But we’re not looking into how the Ethereum platform itself works, but rather how you can acquire Ether through trading Ethereum (for the sake of simplicity, we’ll use Ether and Ethereum interchangeably, this is, as synonyms).

The reason for this is because trading through Ethereum exchanges is the most profitable way of acquiring the currency out of the two.

The other method is mining, and the platform itself is seeing changes that people are still trying to comprehend. Quick summary, Ether used to be mined by “miners”, computers made to register Ethereum transactions, this rewarded the first one to do so with newly generated ETH. The process was expensive since it involved prominent costs in electricity product of the miners’ high consuming functioning.

However, after a security breach suffered during a coin offering, Ethereum has been changing its mining methods. The current one makes it necessary to have coins in your possession already so you can make more.

Nevertheless, we won’t delve any further into these topics since they stray from our objective: Trading Ethereum, since trading will be necessary for mining now, anyways.

So, let’s learn how to do so in two simple steps:

Get A Wallet

Regular banks don’t store cryptocurrencies, so you need to get a separate wallet or account to keep them. Wallets vary a lot in form, some are online (like Coinbase), some work on an app (like Mycelium), some are even randomly-generated and printed as a code on paper, and some are physical or hardware (like Trezor or the Ledger Nano S). What’s important is security, online “banks” aren’t the best option since they’re vulnerable to losses. The best options are apps that register keys, like Mycelium, MyEtherWallet which can work together with hardware wallets. Make sure that the wallet works with addresses only you can manage. Or, if you have the hard-drive space to spare, download Mist, Ethereum’s official wallet.

Enter an Exchange

Exchanges are websites that allow you to register using a credit card or bank account to add funds (in regular currencies) to your website account. It lets you buy Ether on Ethereum exchanges which are then sent to your wallet. Some exchanges even let you enter a price limit and total Ether amount limit so you don’t spend more than what you need. Once you’ve found an offer that matches what you want, the amount is bought and stored in your account. Later, you can send the funds to your personal wallet.

Some of the best Ethereum exchanges are Coinbase, Kraken, Poloniex, Bittrexm, and YoBit.